The North American Free Trade Agreement (NAFTA) is a treaty of the United States, Canada and Mexico. it came into force on 1 January 1994. (Since 1989, there has been free trade between the United States and Canada; NAFTA has extended this regime.) On that day, the three countries became the largest free market in the world – the combined economies of the three nations were $6 trillion and directly affected more than 365 million people. NAFTA was created to remove customs barriers for agriculture, manufacturing and services; Eliminating restrictions on investment protection of intellectual property rights. This should be done while respecting environmental and labour concerns (although many observers point to the fact that the three governments have been negligent in environmental and safety at work since the agreement came into force). Small businesses were among those expected to benefit the most from the removal of trade barriers, as this would reduce trade activity in Mexico and Canada and reduce the administrative burden associated with importing or exporting goods. NAFTA allows your company to send qualified goods to customers in Canada and Mexico duty-free. Goods can be challenged in different ways depending on NAFTA`s rules of origin. This may be because the products are fully obtained or manufactured in a NAFTA party, or because, according to the product`s rule of origin, it takes enough work and equipment in a part of NAFTA to make the product what it is when it is exported.
Some small businesses have been directly affected by NAFTA. In the past, large firms have always had an advantage over small businesses, as large firms could afford to build and maintain offices and/or production sites in Mexico, which avoided many of the old trade restrictions on exports. In addition, pre-NAFTA legislation provided that U.S. service providers who wanted to do business in Mexico had to establish a physical presence there, which was simply too expensive for small businesses.